Tough Year for Group Life and Disability

Last year was a difficult year for the group life and disability market, as sales and inforce premium growth rates were either negative or in the low single digits, according to a new report from Gen Re.

“Continued sluggish job growth and uncertainty around the fate of the Affordable Care Act are clearly influencing both employers and producers,” says Drew King, senior vice president, group & specialty division. “Voluntary results were better than traditional group, as employers may be transferring costs and decision making to employees.”

Carriers who participated in the company’s 2011 U.S. group life market and group disability market surveys reported more than $20.5 billion in total group term life inforce premium, an increase of 3 percent over 2010. Combined short-term and long-term disability inforce premium was up by just 1 percent, totaling close to $13.4 billion.

STD inforce premium showed a 3 percent increase, while LTD inforce remained flat year-over-year. Compared to results for 2010, the total number of employers offering coverage fell slightly (by 0.3 percent) for group term life, and increased by 1 percent for both LTD and STD. The total number of insured employees rose by approximately 1 percent for group term life, while STD and LTD increased by 3 percent and 1 percent, respectively.

Group term life sales declined by around 2 percent in 2011, to just under $2.3 billion. Reported volume for participating carriers showed little change, decreasing by 0.2 percent. On new group term life policies, the average face amount declined by close to 5 percent, to $76,038 in 2011.

Increasing by 2 percent compared to last year, combined group disability (STD and LTD) sales premium reached almost $2 billion in 2011. While STD sales were down by 1 percent, LTD sales increased by 3 percent, an improvement over last year’s decline.

The voluntary life and disability results were somewhat mixed for 2011 but generally more favorable than traditional, the company notes.

Voluntary sales premium for LTD, group life and AD&D were all positive, with only voluntary STD showing a decline as compared to 2010. Inforce results were also positive for all products with the exception of voluntary LTD.